Correlation Between Ashford Hospitality and Advanced Oxygen
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Advanced Oxygen at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ashford Hospitality and Advanced Oxygen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashford Hospitality Trust and Advanced Oxygen Technologies, you can compare the effects of market volatilities on Ashford Hospitality and Advanced Oxygen and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ashford Hospitality with a short position of Advanced Oxygen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Advanced Oxygen.
Diversification Opportunities for Ashford Hospitality and Advanced Oxygen
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ashford and Advanced is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Advanced Oxygen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Oxygen Tech and Ashford Hospitality is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ashford Hospitality Trust are associated (or correlated) with Advanced Oxygen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Oxygen Tech has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Advanced Oxygen go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Advanced Oxygen
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to under-perform the Advanced Oxygen. But the preferred stock apears to be less risky and, when comparing its historical volatility, Ashford Hospitality Trust is 11.95 times less risky than Advanced Oxygen. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Advanced Oxygen Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9.75 in Advanced Oxygen Technologies on September 4, 2024 and sell it today you would lose (3.35) from holding Advanced Oxygen Technologies or give up 34.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Advanced Oxygen Technologies
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Advanced Oxygen Tech |
Ashford Hospitality and Advanced Oxygen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Advanced Oxygen
The main advantage of trading using opposite Ashford Hospitality and Advanced Oxygen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Advanced Oxygen can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Advanced Oxygen will offset losses from the drop in Advanced Oxygen's long position.| Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Aspen Digital | Ashford Hospitality vs. Sunstone Hotel Investors |
| Advanced Oxygen vs. Ashford Hospitality Trust | Advanced Oxygen vs. Ashford Hospitality Trust | Advanced Oxygen vs. Ashford Hospitality Trust | Advanced Oxygen vs. Ashford Hospitality Trust |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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